You can recover an overpayment by reclaiming the money through a worker's pay. If the worker has already returned the funds, you can record the payment instead. The steps you need depend on whether the worker has paid the money back and whether the pay period is open or closed.
Situation | Method |
Worker has not returned funds, and the pay period is open | Negative adjustment timesheet |
Worker has not returned funds, and the pay period is closed | Adjustment Pay Batch |
Worker has not returned funds, and you want to recover the money from a later payment | Manual deduction in the next normal pay batch, or a deduction on the payee record |
Worker has returned funds | New Payment that is non-taxable and not subject to National Insurance (NI), or an existing Returned funds payment |
Reclaim an overpayment through pay
Use this method when the worker has not returned the funds. The deduction appears on their payslip once the adjustment is calculated.
Open pay periods
Process a negative adjustment timesheet for the worker.
Calculate the timesheet.
Check that the payslip shows the deduction.
Closed pay periods
If the pay period is closed, use an Adjustment Pay Batch instead of a normal pay batch.
â ď¸Important: A negative pay batch does not generate an electronic funds transfer (EFT) file.
Create an Adjustment Pay Batch, not a normal pay batch.
Calculate the Adjustment Pay Batch.
Check that the payslip shows the deduction.
Recover the overpayment from a later payment
If the worker has not returned the funds, and you do not reclaim them straight away, you can recover the money from a later payment. Use one of the following methods:
Add a manual deduction in the Net Deduction stage of the worker's next normal pay batch.
Configure a deduction on the worker's payee record.
đNote: The worker shows on the Overpayment Recovery Report until the funds are returned or reclaimed from a later payment. Overpayment Recovery works as a reducing balance loan.
â ď¸Important: Overpayments for historic leavers do not transfer to new records if the worker is reloaded into the system. Manual intervention is required for these cases.
Record funds the worker has returned
If the worker has returned the money, record it as a payment so the overpayment can be cleared.
Create a New Payment that is non-taxable and not subject to National Insurance (NI), or use an existing Returned funds payment.
Open Payroll Entry, then select By Worker or By Reference.
Enter the details of the returned payment.
Calculate the pay batch.
Check that the Overpayment Recovery has disappeared.
đNote: If correcting an overpayment results in a net refund, the refund appears under the Payments category in accounts costing and payroll analysis.
Check the pay batch before you finalise
Before you finalise the pay batch, check the following:
Confirm the gross earnings are correct.
Confirm the tax is correct.
Confirm the superannuation is correct.
đNote: If you charged the client for the overpayment, the negative invoice generated on the billing side acts as a credit note for the excess charged.